The year is coming to an end and that means tax season is just around the corner. Here are some tips to maximise your tax refund from the government:
1. Contribute RM3,000 to PRS (Private Retirement Scheme).
2. Give pocket money to your parents (up to RM1,500 per parent over 60 years old)
3. Improve your lifestyle (new phone, tablet, books, gym membership?), up to RM2,500
4. Make sure you're well-insured (RM3,000 for life insurance, RM3,000 for medical card, they are separate)
5. Max out EPF (RM4,000) & Socso (RM250)
6. For those with kids, save for your kid's future education with SSPN (RM8,000)
7. Go for a comprehensive medical checkup! (up to Rm500)
8. Do good: donate to your favorite charities. Up to 7% of your annual income. For example, if you're earning RM100,000 per year, you can deduct up to RM7,000.
*figures are per annum
On an annual income of RM120,000, you will be paying RM15,696 in taxes for the year (see Income Tax Table below), which is around 13% of your salary.
By maximising the tax reliefs listed above (no-child/donation example):
- PRS: RM3,000
- Parents: RM3,000
- Improve lifestyle: RM2,500
- Life & Medical Insurance: RM6,000
- EPF: RM4,000
- Socso: RM250
- Medical Checkup: RM500
- Personal Relief (everyone is entitled): RM9,000
Total Deductions = RM28,250
Instead of being taxed on RM120,000, your taxable income will now be RM91,750 (RM120,000-RM28,250). Following the chart below, your taxes will be reduced to RM9,167.50, which is now just 7.64% of your RM120,000 income. You would have saved RM6,528.50!
These are some quicks actions that you can take. The benchmark is to "take back" at least 15-30% of the taxes you pre-pay monthly via PCB. Have fun!